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Will Blue Owl Capital's (OBDC) Q2 Profits Grow or Decline?
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Blue Owl Capital Corporation (OBDC - Free Report) is set to report its second-quarter 2024 results on Aug 7, after the closing bell.
The Zacks Consensus Estimate for second-quarter earnings is currently pegged at 47 cents per share, implying a decline of 2.1% from the year-ago reported number. The estimate remained stable over the past month. The Zacks Consensus Estimate for second-quarter revenues is currently pegged at almost $388.8 million, suggesting a 1.4% fall from the year-ago actuals.
Image Source: Zacks Investment Research
Blue Owl Capital beat the consensus estimate for earnings in three of the trailing four quarters and missed once, with the average surprise being 3.2%, as you can see below.
Blue Owl Capital Corporation Price and EPS Surprise
Our proven model does not conclusively predict an earnings beat for Blue Owl Capital this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate currently stands at 47 cents per share, in line with the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Now, let’s see how things have shaped up before the second-quarter earnings announcement.
Q2 Key Predictions
In the second quarter, net investment income is expected to have received a boost from strong credit performance across the portfolio and favorable conditions in the high-interest rate environment. Our model estimate for net investment income in the second quarter is pegged at around $183 million.
OBDC’s dividend income is expected to have witnessed an uptick due to recurring dividends earned from its equity investments. Both the Zacks Consensus Estimate and our model estimate for controlled affiliated dividend income in the second quarter suggest nearly 38% year-over-year growth.
Blue Owl Capital's investment portfolio is expected to have experienced growth in the upcoming quarter, driven by robust demand for effective financing solutions. Our projections suggest a more than 42% increase in controlled affiliated interest income compared to the same quarter last year. However, both the consensus mark and our estimate for non-controlled non-affiliated interest income indicate a more than 4% year-over-year decline.
Repayments are expected to have remained relatively subdued in the quarter under review, primarily due to high interest rates. Also, both the Zacks Consensus Estimate and our estimate for payment-in-kind interest income from non-controlled, non-affiliated investments suggest a more than 9% year-over-year decline.
Additionally, the company is likely to have experienced elevated operating expenses due to higher interest expenses and performance-based incentive fees. These, in turn, are anticipated to have trimmed its margins a bit in the to-be-reported quarter, making an earnings beat uncertain.
Price Performance
Blue Owl Capital's stock has lost 1.9% year to date, more than the industry’s fall of 1.5%. The S&P 500 Index registered a 12.5% gain during this time. In comparison, its peers like The Carlyle Group Inc. (CG - Free Report) and Ares Management Corporation (ARES - Free Report) increased 0.6% and 12.5%, respectively, during the same period.
YTD Price Performance
Image Source: Zacks Investment Research
What Should Investors Do Now?
Given Blue Owl Capital's diversified portfolio with balanced weightage in different industries and a rising number of portfolio companies, current investors may consider holding onto the stock and closely monitoring the upcoming earnings results. While these factors will likely help the company navigate through tough times, it also faces several challenges, including increasing competition, an anticipated decline in profits, a high debt level and growing expenses. These headwinds suggest that new investors might want to wait and observe how the company navigates these challenges before making any investment decisions.
Image: Bigstock
Will Blue Owl Capital's (OBDC) Q2 Profits Grow or Decline?
Blue Owl Capital Corporation (OBDC - Free Report) is set to report its second-quarter 2024 results on Aug 7, after the closing bell.
The Zacks Consensus Estimate for second-quarter earnings is currently pegged at 47 cents per share, implying a decline of 2.1% from the year-ago reported number. The estimate remained stable over the past month. The Zacks Consensus Estimate for second-quarter revenues is currently pegged at almost $388.8 million, suggesting a 1.4% fall from the year-ago actuals.
Blue Owl Capital beat the consensus estimate for earnings in three of the trailing four quarters and missed once, with the average surprise being 3.2%, as you can see below.
Blue Owl Capital Corporation Price and EPS Surprise
Blue Owl Capital Corporation price-eps-surprise | Blue Owl Capital Corporation Quote
Q2 Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Blue Owl Capital this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate currently stands at 47 cents per share, in line with the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Blue Owl Capital currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Now, let’s see how things have shaped up before the second-quarter earnings announcement.
Q2 Key Predictions
In the second quarter, net investment income is expected to have received a boost from strong credit performance across the portfolio and favorable conditions in the high-interest rate environment. Our model estimate for net investment income in the second quarter is pegged at around $183 million.
OBDC’s dividend income is expected to have witnessed an uptick due to recurring dividends earned from its equity investments. Both the Zacks Consensus Estimate and our model estimate for controlled affiliated dividend income in the second quarter suggest nearly 38% year-over-year growth.
Blue Owl Capital's investment portfolio is expected to have experienced growth in the upcoming quarter, driven by robust demand for effective financing solutions. Our projections suggest a more than 42% increase in controlled affiliated interest income compared to the same quarter last year. However, both the consensus mark and our estimate for non-controlled non-affiliated interest income indicate a more than 4% year-over-year decline.
Repayments are expected to have remained relatively subdued in the quarter under review, primarily due to high interest rates. Also, both the Zacks Consensus Estimate and our estimate for payment-in-kind interest income from non-controlled, non-affiliated investments suggest a more than 9% year-over-year decline.
Additionally, the company is likely to have experienced elevated operating expenses due to higher interest expenses and performance-based incentive fees. These, in turn, are anticipated to have trimmed its margins a bit in the to-be-reported quarter, making an earnings beat uncertain.
Price Performance
Blue Owl Capital's stock has lost 1.9% year to date, more than the industry’s fall of 1.5%. The S&P 500 Index registered a 12.5% gain during this time. In comparison, its peers like The Carlyle Group Inc. (CG - Free Report) and Ares Management Corporation (ARES - Free Report) increased 0.6% and 12.5%, respectively, during the same period.
YTD Price Performance
Image Source: Zacks Investment Research
What Should Investors Do Now?
Given Blue Owl Capital's diversified portfolio with balanced weightage in different industries and a rising number of portfolio companies, current investors may consider holding onto the stock and closely monitoring the upcoming earnings results. While these factors will likely help the company navigate through tough times, it also faces several challenges, including increasing competition, an anticipated decline in profits, a high debt level and growing expenses. These headwinds suggest that new investors might want to wait and observe how the company navigates these challenges before making any investment decisions.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.